Friday, February 3, 2012

122 2G Licenses revoked - Who is in dock ?


I hold a pre-paid connection starting 91716 and now perhaps I may have to look for mobile no. portability !

On 2nd Feb 2012, the  Supreme Court  in a landmark judgment revoked 122 telecom licenses issued under a scandal-tainted 2008 sale, including 22 licenses.  For long Govt. had held that the old procedures had been followed and Kapil Sibal went on record stating that there was no loss to the ex-chequer at all.   The fact as brought out is that the Companies which had the beneficial allotment immediately sold / transferred the same at a very high price making windfall gains.   Also, of the  six, three  companies  viz. Swan Telecom, S Tel and Unitech were new  entrants  in the telecom sector.  The fact that these  operators  could  draw  huge foreign investments,  even  before  establishing  a  foothold  in  the  Indian  telecom  market  would suggest that acquiring UASL and with it,  allotment of 4.4 MHz of GSM spectrum for roll out,  was the main factor which attracted  the foreign investment.
Source : Govt Audit report : http://saiindia.gov.in – audit report.

Now coming back to my connection – it is that of Uninor, which rolled out in a big way and it appears that there could be some trouble as they in the list of the companies whose license stands cancelled.  There is news quoting the Company’s Chief Executive  that  Norwegian telecom firm Telenor could quit India now after the Supreme Court revoked its mobile licenses and not wait for new market rules to be introduced although affected license holders can operate for four months, during which regulators will come up with new market rules.

Telenor holds via Uninor, a joint venture with real estate firm Unitech.  Telenor’s Jon Fredrik Baksaas is quoted as saying that quitting Indian market now and cutting down its losses is one option being mulled.  He is worried that the climate of uncertainty created by the ruling would have an extreme negative effect on further investments and further financing.”  The continuance of Telenor is not the main issue as 2G unfolded more bringing more under the scanner and at this juncture the  telecom industry  would be thanking  the Supreme Court for hastening the process of consolidation of the industry by cancelling the 122 licenses given by Andimuthu Raja in 2008 and asking the government to reissue them at market-driven prices. That implies clearly that sooner, the  UPA government will have to conduct another auction to fix higher prices for spectrum. The Supreme Court judgment has said that the process of issuing licenses has to now be delinked from the purchase of spectrum – and the only implication of this part of the order is that scarce spectrum will come at a higher price for everyone in future.

Way back in Jan 2008 – licenses perhaps fell from sky – not as rain favouring all but to select few ! – the portfolio and market changed totally – from the days when people were waiting for connection, to an era where there were unsolicited calls offering connections (with or without valid documents) and the rates started falling – recharges were made available from the lowest denominations, available at corner shops ! – but why companies who had no expertise or previous experience in telecom sector got into the muddle remained an unanswered Question ?  - Real estate players and others who initially got the allotment sold their shares to foreign parties raking huge premium.

Fortunately all these were unearthed and now the crux before the Court is the determination of whether the underpricing of spectrum was done deliberately or for malafide reasons in return of favours to some !  There would be more muddle – stronger financial players buying out weaker ones – reselling, consolidation, merger and more.  Apart from the correction and possible punishments to the wrong-doers (with our great faith in democracy and on the systems of Court and Institutions) the future also would make the market players reduced in size and the rates are most expected to go up.  But as a customer I welcome this hike and if the price increase is going to benefit the Nation and not the individuals – every citizen should only welcome this change and thank the Supreme Court as also the person behind in bringing these before the Court. 

Uninor Limited is an Indian mobile network operator based in Gurgaon, India. The company held Unified Access Service(UAS) licenses in India’s  22 telecom circles,  caught customer attention by advertisements and sponsoring sporting events, reportedly has more than 25 million customers. 

TRAI says there will not be much impact on customers due to cancellation of licenses as around 95% of total subscribers belong to operators who got their licenses before Jan 2008.  Some of the new operators indicate that they may file review petition.  There may or may not be Uninor and some other players  ! – it does not really matter to  people like us. 


With regards – S. Sampathkumar.

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